Wayman Value Investing April 2025 Portfolio
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April 2025 Outlook
March delivered a sobering reminder that markets rarely move in a straight line. The S&P 500 declined 5.75% last month, pushing the index into negative territory for the year at -4.59%. This marked the worst monthly performance since September 2022. While the Dow Jones Industrial Average fared relatively better, it still posted a 4.20% loss. What's particularly noteworthy is the divergence between the Magnificent 7 and the broader market – without these seven stocks, the S&P's March decline would have been just 2.59% instead of 5.63%. This concentration of weakness among market leaders is worth watching carefully.
The market's attention has been firmly fixed on Washington, where President Trump's rapid-fire executive orders and policy announcements have dominated headlines. Tariffs have emerged as the central concern, with the administration implementing a global 25% tariff on steel and aluminum on March 12th. Meanwhile, Congress passed a significant 10-year reconciliation bill along party lines, outlining $4.5 trillion in tax cuts while potentially adding $2.8-$3.3 trillion to the deficit. These policy shifts create both winners and losers, and the market is still sorting through the implications.
April has opened with what the administration calls "liberation day" on April 2nd, when new tariffs on imported finished cars and auto parts took effect. The market reaction has been decidedly negative thus far, with particular pressure on companies relying heavily on global supply chains. Foreign manufacturers with U.S. operations have seen their shares tumble as investors contemplate higher input costs and potential reciprocal tariffs from trading partners. The industrial and consumer discretionary sectors have been hit especially hard, though energy continues to show relative strength, up 9.30% year-to-date. The uncertainty surrounding these trade policies has fueled volatility across all major indices.
Despite the recent market turbulence, corporate fundamentals remain relatively strong. Fourth quarter earnings for 2024 exceeded expectations with nearly 75% of companies beating estimates – a historically high beat rate. The quarter set a new earnings record, rising 3.5% sequentially from Q3 and 13.6% year-over-year. Sales also reached record levels, though the growth rate was more modest at 1.4% quarter-over-quarter. Looking ahead, analysts are projecting new quarterly earnings records in the second half of 2025 and into 2026, suggesting that the current market weakness may create opportunities for patient investors who can look past the near-term volatility.
Going forward, the critical question is whether these tariffs represent opening salvos in prolonged negotiations or permanent fixtures of a new protectionist era. The Street appears to be betting on the former, viewing current proposals as part of a negotiation process that could yield more moderate policies by June. Until then, expect continued uncertainty, heavy trading volumes, and elevated volatility as companies adjust supply chains, reconsider capital expenditures, and potentially reshape their workforces.
User Guide - Tracking the Spreads
What are spreads, and why should you care? I believe that tracking spreads is essential for making informed investment decisions. Each month I categorize stocks into tiers based on the spread between their calculated value and market value.
Here’s how it works:
STASH: This tier includes stocks with the largest spreads. These are the hidden gems that offer significant potential upside. Based on my valuation, now is the perfect time to capitalize on their undervalued status.
GATHER: Stocks in this tier have a substantial spread, but not as significant as those in the Stash tier. They still offer attractive opportunities for investment, and I recommend considering them for your portfolio.
STORE: The Store tier consists of stocks with modest or tightening spreads. While they may not have as much potential for immediate growth, they still hold value and can contribute to a balanced portfolio. Wayman holds these stocks, but I am not actively buying additional shares this month.
CACHE: In this tier, stocks have narrow or no spreads, indicating that their market value aligns closely with Wayman’s calculated value. It may be time to consider exiting positions in these stocks and reallocating your resources.
Categorizing stocks based on spreads helps you identify stocks with the greatest potential for growth. I believe in capturing maximum upside while minimizing potential losses, and Wayman’s tiered system allows you to prioritize your investment decisions.
Model Allocation
For the purpose of third-party portfolio tracking and validation we use the following model portfolio allocation:
65% invested in Stash tier stocks
30% invested in Gather tier stocks
5% invested in Store tier stocks
The Wayman portfolio is tracked and audited by Hulbert Ratings, which has been rigorously tracking the real-world performance of investment advisory newsletters for over 40 years. You can follow our performance here.